…when President Hugo Chávez came to power in 1999, he started squeezing even more money out of the firm [Petróleos de Venezuela (PDVSA)]. By 2000 investment had fallen to $2.5 billion.
Not only does an
Economist special report refute the common conception that the world's major oil companies are arrogant and greedy Western hegemons who control everything, overtly or otherwise — "PFC Energy, a consultancy, calculates that 77% of the world's oil and gas is found in countries whose production is controlled by state-owned oil firms and their partners" —
Oil's dark secret also puts the history of Hugo Chávez's revolution in a slightly different light than the heroic one we are used to seeing in the media and among street demonstrators.
… Mr Chávez denounced the [PDVSA] strikers as saboteurs and sacked them all. The toll was highest among skilled workers: two-thirds of managers and technical staff went. At a stroke, PDVSA lost almost all of its most experienced and best-qualified employees, with an irreplaceable understanding of the idiosyncrasies of its wells and fields.
Critics say that the government restaffed the firm with incompetent cronies and placemen. Contractors whisper that it is having trouble spending even its reduced investment budget.…
Staffing has certainly become more political. Mr Chávez's cousin, Asdrubal, runs the firm's shipping arm. The president's brother, Adan, helps to co-ordinate the company's subsidised oil sales around the Caribbean as ambassador to Cuba. Those who signed a petition advocating a recall election for Mr Chávez complain that they cannot get jobs at PDVSA or its contractors.
Politics has begun to intrude into the firm's strategy, too. Mr Chávez wants PDVSA to do less business in the United States and more in Latin America. In the name of regional integration, he is pushing for an expensive natural-gas pipeline from Venezuela to Brazil, which would “bring gas that does not exist to markets that do not exist”, in Mr Giusti's view. In theory, the hugoducto, as the pipeline is sarcastically known, will be a money-making venture, but Mr Chávez has also dragooned the company into all manner of charitable works. He insists that the firm spend a tenth of its investment budget on social programmes, and has pledged its help, in the form both of cheap oil and technological assistance, to allies from Argentina to the Bahamas.
Clearly, Venezuela's oil company no longer operates at arm's length from the government. Its head, Rafael Ramírez, is also the Minister of Energy and Oil. “The president tells PDVSA to commit suicide, and he says, ‘Yes sir!'” gripes Elie Habalian, a former Venezuelan representative at OPEC, with a mock salute.
The company is also becoming more secretive. … Its finances are certainly getting murkier: it now transfers much of its earnings directly to a development fund controlled by Mr Chávez, rather than sending them all to the central bank as it used to.
Despite these worrying trends, the government claims that PDVSA has fully recovered from the strike and sackings, and is now producing more than it did beforehand. Officially, it is still planning to raise output to almost 4m b/d by 2012. But observers scoff at such notions. The company can no longer maintain its own fields, let alone complete the many new projects it is pursuing, says Diego González, who used to work for its gas division. Wood Mackenzie estimates that output slumped to less than 1.2m b/d in 2003. It subsequently recovered a bit, to 1.6m b/d, but is now falling again.
These failings have not stopped Mr Chávez from forcing most foreign oil firms in Venezuela to go into partnership with its national champion. It is now running the resulting joint ventures—presumably no better than it runs its original fields.
¡Recuerdén! It's all for the good of el pueblo!
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